I am author of the book "Caring for Our Parents" and resident fellow at The Urban Institute, where I am affiliated with the Tax Policy Center and the Program on Retirement Policy. I also write a tax and budget policy blog, TaxVox, which you may read at Forbes.com or at http://taxvox.taxpolicycenter.org/ Before joining Urban, I was a senior correspondent in the Washington bureau of Business Week.

What Obama's Budget Would Mean for Seniors

In his 2013 budget released today, President Obama has proposed cutting $250 billion out of Medicare and $65 billion out of Medicaid over the next 10 years. Nursing homes,hospitals, and other providers would be paid less, while some Medicare beneficiares would have to pay more out of pocket. At the same time, federal spending for other critical senior services programs would be frozen–in many cases for the third year in a row.

Here is a quick summary of some of Obama’s major budget initiatives and how they’d effect seniors. He has proposed some of these changes in the past but there is little doubt that they are a major priority for a White House looking to reduce the budget deficit.

Medicare: One-quarter of Medicare beneficiaries would pay higher, income-related premiums for Medicare Part B and D (the drug benefit). Starting in 2017, new beneficiaries would pay a surcharge for Medigap policies that pick up Medicare copays and other “first dollar” costs. In that same year, they’d also be charged a $100-per-episode fee for home health care and a $25 increase in the Part B deductible. Many of these changes are aimed at encouraging more seniors to enroll in Medicare Advantage managed care plans

At the same time, Medicare would reduce payments to nursing homes for post-acute care. It would also cut Medicare payments that pick up some of the cost of patients’ bad debts.

For years, skilled nursing facilities have been paid generously by Medicare for post-acute and rehabilitation services but lost money on Medicaid payments for their long-stay residents. Now, the Adminstrationwould cut those Medicare reimbursements–a step likely to force some facilities to abandon their money-losing Medicaid beds. That may not be a problem in areas where there is overcapacity of long-stay nursing home beds. But where there is a shortage, it may create some real challenges for those who are unable to continue to live at home.

Finally, Obama has again proposed to penalize nursing facilities whose post-acute Medicare patients are readmitted to the hospital for conditions that could have been avoided, such as falls or infections.

Medicaid: Obama would make it tougher for states to game the Medicaid system by taxing providers such as nursing homes and using the money to increase payments to those facilities. This practice effectively shifts Medicaid costs to the federal government and the change would reduce the amount of money available to state Medicaid programs. The White House would also reduce payments to vendors of durable medical equipment such as wheelchairs.

Other spending. Funding for the National Institute for Aging would be effectively frozen. Most other spending on long-term care services is funded by the Department of Health and Human Services. The Obama budget would freeze funding for the Administration on Aging. Thus, the budgets for nutrition services such as Meals on Wheels, caregiver supports, respite care, and aging network services would all be held at 2012 levels. Funding for aging and disability resource centers would be cut by more than one-third. Alzheimer’s Disease demonstrations would get $6 million more and adult protective services would get $8 million.

The Department of Housing and Urban Development would receive $475 million for Section 202 housing programs for the elderly.

Keep in mind, the Obama’s budget is very likely the high water mark for spending on these programs. If Congress passes a budget this year–which is unlikely at best–many of these programs would be cut even more deeply. And long-term spending for many of these programs would be in even more serious jeopardy, especially given major spending reductions being proposed by all of the Republican presidential candidates.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Comments

Howard: “And long-term spending for many of these programs would be in even more serious jeopardy, especially given major spending reductions being proposed by all of the Republican presidential candidates.” Let’s tell it like it is. All of the Republican candidates hot to slash spending would likely eliminate entirely all of the programs for the aging poor. You said it well when you said Medicaid long-stay elders in places where there is a shortage of Medicaid beds would be in serious trouble even with the proposed Obama budget. A lot of them would be elders without care at all and likely to meet their demise a lot sooner than they do now. I know of no place where there is a surplus of long-stay Medicaid beds. The longer people live the more likely we are to see shortages of facilities that will accept Medicaid, particularly when the payment gets cut. I expect that many such facilities won’t be able to stay in business.

The idiot fallacy. Cuts that result from savings from efficiencies, from fraud reduction and improved care and better, earlier diagnosis of problems would be great. Cuts across the board never address the appropriate areas. The sometimes immediate, more often long term effects of cuts are never addressed. Above, we’ve got a listing of care and services that will be restricted or eliminated. This information should be in the legislation. Legislation should also address expected results on those affected by the proposals. For instance, it should state that it will eliminate breast exams for 20,000 women and 12,000 of those can afford to pay something for their exam, but the remaining 8,000 won’t be able to get an exam and statistics say 2000 of those will get breast cancer which in sum total will eventually cost the state umpteen zillion dollars. If we’re going to cut, let’s understand the costs and tradeoffs and an expectation of future costs resulting from the action being taken.

I believe this is correct. I also believe this is the kind of plan that we are likley to end up with, though somewhat less generous as it will be forced on us by our creditors who won’t give a hair about healthcare for seniors and the needy. Read “Penny Medical” articles if you dont have insurance.